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Tabari ... delays in Saudi projects.

Drake & Scull Q4 profit down; 2014 revenue hits $1.31bn

DUBAI, February 15, 2015

Drake & Scull, a regional leader in the integrated design, engineering and construction fields, reported a 70 per cent drop in fourth-quarter net profit on Sunday.

The Dubai-headquartered contractor made a profit of Dh13 million ($3.54 million) in the three months to December 31, it said in a statement to Dubai's bourse.

The company did not provide a profit figure for the corresponding period of the previous year, but Reuters data shows it made a profit of Dh42.8 million ($11.65 million) in the fourth quarter of 2013.

Two analysts polled by Reuters forecast Drake & Scull would make a quarterly profit of between Dh44 million ($11.98 million) and Dh52.6 million ($14.32 million).

Net profit for the fiscal year was Dh110 million ($29.95 million) and revenues Dh4.83 billion ($1.31 billion). Earnings per share (EPS) reached Dh0.047 ($0.013), the company said.
 
Revenues recorded for the fiscal year were flat compared to last year and were primarily generated by the Saudi and UAE markets, each contributing 43 per cent and 26 per cent respectively.

The company’s general contracting and engineering businesses generated 40 per cent and 51 per cent of the cumulative revenues achieved in fiscal 2014. The oil and gas division and waste water division maintained their yearly contribution to the top line by five per cent and three per cent, respectively.

Profitability for the fiscal year was impacted by the delays in the Saudi market in the general contracting sector and the UAE receivables provisions which affected the overall operating and net margins of the group, it said.

The oil and gas business delivered solid margins and consistent results throughout the fiscal year contributing 50 per cent of the consolidate bottom line in 2014.

DSI continued to increase its market share in the Middle East and North Africa (Mena) region and managed to win Dh5.34 billion ($1.45 billion) worth of new projects across multiple sectors in fiscal 2014.The UAE market and particularly Dubai witnessed accelerated growth for DSI as total project awards in its home market reached Dh1.4 billion ($381 million) in fiscal 2014.

The order backlog reached a record high of Dh14.4 billion ($3.92 billion) representing a year-on-year increase of 20 per cent. Saudi Arabia and the UAE markets remain the largest contributors to the backlog accounting for 34 per cent and 18 per cent respectively as of  December 31.

Commenting on the results, Khaldoun Tabari, CEO of DSI, said: “The economic scenario in our region underwent a rapid change in the last few months which has had an impact on the regional construction industry. A cautious sentiment in the real estate sector has led developers to become more price conscious, which has lengthened the project development cycle in all our key markets. This has resulted in delays in our collections which created a slowdown in our revenue generation. The impact of this also affected our profitability margins.

“Reviewing our performance in 2014, we had a strong start in the first half of the year, with a lot of positive momentum in the form of multiple project awards in our region and especially the UAE. In the second half of the year, the entire region experienced unforeseen global economic challenges and uneven geopolitical developments that had a far reaching effect on the region’s economy. From a corporate perspective, we experienced considerable delays in our operations, particularly in our biggest market Saudi Arabia, which had a significant impression on our top line target for the year," he said.

"The magnitude of our operations in Saudi Arabia meant that we devoted our synergies and efforts in overcoming continuous delays in receivables, which strained our liquidity and impacted our working capital for the year. We also dealt with provisions in the UAE market which influenced our bottom line in a significant measure,” said Tabari. - TradeArabia News Service and Reuters




Tags: Projects | contractor | Drake and Scull |

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